The state’s estimated revenue shortfall for the biennium ending in 2011 grew from $2.6 billion to $2.8 billion after the latest revenue forecast was released recently.
The forecast was about what chief state economist Arun Raha expected except for a revenue decline of $118 million due to what Raha called “non economic” factors. Among them was the Dot Foods court decision that cost the state tax revenue from out-of-state companies doing business in Washington, and people failing to pay sales tax for online and out-of-state purchases.
The Washington Retail Association (WRA) favors spending cuts to address the shortfall and opposes a host of tax increases under consideration by Governor Gregoire and the Legislature. WRA projects further layoffs and a lengthier economic recovery if new taxes and fees are approved this session, which ends on March 11.
The recovery in state revenues will be slow, Raha said.
Revenue trends “do not represent a quick return to normalcy,” he said. “We do not get back to fiscal year 2008 levels of revenue until fiscal year 2012.”
Among the highlights of Raha’s report:
- Business loans, which help create two-thirds of all new jobs, remain difficult to obtain.
- The rate of job losses has slowed, but continues. Raha expects unemployment to climb as high as 9.8 percent this summer before beginning to decline. The current statewide unemployment rate is 9.5 percent.
- Consumer confidence, a key measure for retailers, is improving but tentatively, Raha said.
- The state’s strong export markets, Boeing and Microsoft, will stabilize the state economy and compensate for weaknesses in commercial construction and manufacturing.
